In June, Bridgeline Digital and UPS Logistics announced that they had signed a multi-year agreement to offer an end-to-end eCommerce solution comprised of Bridgeline’s “eCommerce Fulfilled™” technology platform and UPS logistics and fulfillment services.

In July, a large national franchise signed a multi-year, multi-million dollar agreement with Bridgeline Digital to provide iAPPS ds to over 4,300 of their franchises.

The iAPPS platform was selected as a finalist for two 2012 CODiE awards – Best Content Management Solution, globally and Best Electronic Commerce Solution, globally.

KMWorld Magazine editors selected the iAPPS platform as a trend setting product of the year.

B2B Interactive named Bridgeline Digital as one of the top interactive technology companies in America.

Deliotte named Bridgeline Digital to its 2012 Fast 500 listing, recognizing Bridgeline Digital as one of the 500 fastest growing technology companies in North America.

Fiscal 2013 Outlook

Bridgeline Digital expects fiscal 2013 revenue will be approximately $29 million, with iAPPS related revenue increasing 40% from fiscal 2012. This revenue projection includes a projected reduction of non-iAPPS related legacy revenue of approximately $3.0 million.

In addition, Bridgeline Digital expects to continue to generate positive non-GAAP income and positive adjusted EBITDA for fiscal 2013.

Conference Call Information

Bridgeline Digital will host a conference call to discuss fourth quarter and fiscal 2012 results at 4:30 p.m. ET today. To listen to the conference call, please dial (877) 837-3910 within the U.S. or (973) 796-5077 for international callers.

Non-GAAP adjusted net income and non-GAAP adjusted earnings per diluted share are calculated as net income or net income per share on a diluted basis, excluding, where applicable, impairment charges, amortization of intangible assets, stock based compensation and the related tax effects.

Adjusted EBITDA and Adjusted EBITDA per diluted share are defined as earnings before interest, taxes, depreciation and amortization and before stock compensation and impairment charges. Bridgeline uses Adjusted EBITDA as a supplemental measure of our performance that is not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). Bridgeline’s management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, Bridgeline management presents non-GAAP financial measures in connection with GAAP results. Bridgeline urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which is included in this press release, and not to rely on any single financial measure to evaluate Bridgeline's business.

Our definitions of non-GAAP adjusted net income and Adjusted EBITDA may differ from and therefore may not be comparable with similarly titled measures used by other companies, thereby limiting their usefulness as comparative measure. Because of the limitations that non-GAAP adjusted net income and Adjusted EBITDA have as an analytical tool, investors should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP.

All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions, including, but not limited to, the impact of the weakness in the U.S. and international economies on our business, our inability to manage our future growth effectively or profitably, fluctuations in our revenue and quarterly results, our license renewal rate, the impact of competition and our ability to maintain margins or market share, the limited market for our common stock, the volatility of the market price of our common stock, the performance of our products, our ability to respond to rapidly evolving technology and customer requirements, our ability to protect our proprietary technology, the security of our software, our dependence on our management team and key personnel, our ability to hire and retain future key personnel, our ability to maintain an effective system of internal controls, or risks associated with our contracts with the U.S. federal government, as well as other risks described in our filings with the Securities and Exchange Commission. Any of such risks could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. We expressly disclaim any obligation to update any forward-looking statement.

BRIDGELINE DIGITAL, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS (Dollars in thousands, except per share data)

Three Months Ended

Nine Months Ended

June 30,

June 30,

2012

2011

2012

2011

Reconciliation of GAAP net loss to

non-GAAP adjusted net income:

GAAP net loss

$(277)

$(246)

$(906)

$(731)

Amortization of intangible assets

184

184

571

582

Impairment of intangible asset

-

-

281

-

Stock-based compensation

101

99

256

286

Non-GAAP adjusted net income(loss)

$8

$37

$202

$137

Reconciliation of GAAP loss per diluted share to

non-GAAP adjusted earnings per diluted share:

GAAP net loss per share

$(0.02)

$(0.02)

$(0.07)

$(0.06)

Amortization of intangible assets

0.01

0.01

0.05

0.05

Impairment of intangible asset

-

-

0.02

-

Stock-based compensation

0.01

0.01

0.02

0.02

Non-GAAP adjusted net income(loss)

$0.00

$0.00

$0.02

$0.01

Reconciliation of GAAP net loss to Adjusted EBITDA:

GAAP net loss

$(277)

$(246)

$(906)

$(731)

Provision for income tax

21

21

90

63

Interest expense (income),net

98

54

234

166

Amortization of intangible assets

184

184

571

582

Impairment of intangible asset

-

-

281

-

Depreciation

262

142

725

454

EBITDA

288

155

995

534

Other amortization

40

88

130

263

Stock-based compensation

101

99

256

286

Adjusted EBITDA

$429

$342

$1,381

$1,083

Reconciliation of GAAP net loss per diluted share to

Adjusted EBITDA per diluted share:

GAAP net loss per share

$(0.02)

$(0.02)

$(0.07)

$(0.06)

Provision for income tax

-

-

0.01

0.01

Interest expense (income),net

0.01

-

0.02

0.01

Amortization of intangible assets

0.01

0.01

0.04

0.05

Impairment of intangible asset

-

-

0.02

-

Depreciation

0.02

0.01

0.06

0.04

Other amortization

-

0.01

0.01

0.02

Stock-based compensation

0.01

0.01

0.02

0.02

Adjusted EBITDA

$0.03

$0.02

$0.11

$0.09

BRIDGELINE DIGITAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share data)(Unaudited)